Economic Policy: A History Ch. 18

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Economic Policy A HistoryCh. 18

• How did ideas of government regulation of the
  economy change over time?
• Why was there a shift away from laissez-faire
  attitudes?
• How did the interventionist state change the idea
  of government involvement in regulating the
  private economy?

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19th century (1800s)

• State governments were active in
  promoting/regulating private economic activity
• Regulationuse of governmental authority to
  control or change a practice in the private
  sector
• National regulatory programs few, restricted
• Post-1865, major period of economic growth
  (industrialization)
• Problems from industrialization (accidents,
  disease, corporations)
• Downturn in business cyclesfluctuations between
  growth and recession (typical in capitalist
  economy)
• Limited jurisdictions of states couldnt compete
  with national corporations

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• However, businesses/conservatives supporting
  govt intervention and aid for econ. development
  now supported laissez-faire (let it be) policy
• Britains Adam Smith Wealth of Nations
• Govt involvement in economy wrong role limited
  to law/order and that not profitable for private
  citizens
• Involvement econ system and set of govt
  policies that would encourage private profit
• Interstate Commerce Act 1887 regulated by new
  Interstate Commerce Commission (ICC) to regulate
  railroad system
• trust-bustingsplitting up monopolistic
  business practices
• Sherman Anti-Trust (1890)
• These two acts key legislative responses to
  industrialization

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Progressive Era (1890-1917)

• Movement to reform political, economic, social
  systems (make progress)
• Desire for corporations under control of
  government for democratic ends
• Strengthen/establish regulatory programs under TR
  and Wilson
• Pure Food and Drug Act (1906) beginning of
  consumer protection
• Banking and regulation of business
• Federal Reserve Act (1913) creates Federal
  Reserve System to reg. natl banking system,
  flexible system
• Federal Trade Commission Act (1914)creates
  Federal Trade Commission to reg. competition
  (along w/Clayton)
• Clayton Act (1914)supplements Sherman Act the
  labor of a human being is not a commodity or
  article of commerce.

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16th amendment

• Fiscal (government spending) constraints forced
  public officials to focus on income tax to raise
  money
• 1895 SC rules income tax was a direct tax, which
  had to be allocated among states in proportion to
  their population (political/admin impossibility)
• 16th Amendment (1913) to lay and collect taxes
  on incomes, from whatever source derived
• Now major source of general revenues

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Great Depression/New Deal

• After 1929 stock market crash, all sectors of
  economy suffered
• Initial response of Hoover admin was that
  economically sound (1/4 all workers unemployed
  by 1933)
• Major turning point when laissez-faire state
  replaced with interventionist stategovt
  active/extensive role in guiding/regulating
  private economy

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Reforms

• Financial
• Glass-Steagall Act (1933) separation of
  commercial and investment banks set up FDIC
  control stock market abuse
• Securities and Exchange Act (1934) created SEC
  to regulate stock exchange, enforce act, reduce
  stocks on margin
• Agricultural
• Agricultural Adjustment Act (1933, 1938) first
  (unconstitutional) to bring farm production to
  meet supply/demand second to give subsidies in
  order to regulate interstate commerce

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• Labor
• National Labor Relations Act (Wagner Act, 1935)
  guaranteed workers rights to organize, unionize
  under National Labor Relations Board
• Fair Labor Standards Act (1938) set a minimum
  wage banned child labor
• Industrial
• Federal Communications Commission (FCC, 1934)
  regulates public airwaves (radio, telephone,
  telegraph)
• Interstate Commerce Commission to regulate
  transportation
• Govt regulation replacing most competition in
  these industries established legitimacy and
  viability of ntl govt intervention in economy

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Social Regulation Era (1950-1980)

• Economic regulationgovt regulation of business
  practices, industry rates, routes tailored to
  conditions of particular industry
• Social regulationgovt regulation of quality and
  safety of products and conditions under which
  goods/services produced protect/enhance q.o.life
• Clean Air Act 1970
• Occupational Safety and Health Act (OSHA)
• Environmental Protection Agency (EPA)

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Why Social Regulation?

• Social activism of 60s/70s through interest group
  involvement
• Public consciousness of dangers to health,
  safety, environment
• Advocacy of social regulation as a re-election
  ploy (visibility, ntl prominence)
• Presidents give support to social regulation
  direct costs to govt legislation minimal

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• Current issues with the economic policy
• https//www.youtube.com/watch?vJjv-MtGpj2U